A step (change) in the right direction? – Johnny Shearman

By Johnny Shearman

Professional Support Lawyer Johnny Shearman recently co-authored an article for New Law Journal with Tracey Stretton (Ankura) and Mark Surguy (Weightmans) regarding the Disclosure Pilot Scheme and an analysis of eDisclosure trends in England and Wales.

This article was first published in New Law Journal, 22 October 2020, here.

The Disclosure Pilot Scheme, operating in the Business and Property Courts of England and Wales, aims to bring about a change in attitudes towards disclosure. With the news of its extension to the end of 2021 the publication of the Third Interim Report (the Interim Report) of the Pilot’s official monitor Professor Rachael Mulheron as well as the Disclosure Working Group’s proposed revisions to the Pilot, it is worth considering any emerging views regarding its effectiveness in achieving its stated aim. Whilst the Interim Report has only recently been published it was completed in February 2020 and provides feedback from the responses to a questionnaire practitioners were asked to complete at the end of 2019. Its data is therefore nine months old and practitioners have had another lengthy period to experience the Pilot since they were asked to complete the original survey. The Interim Report therefore provides the insight of practitioners perhaps still in the early stages of implementation. However, the feedback given by way of the Interim Report indicates that not everything is going as was intended.

Why was the Pilot implemented?

Initially launched in January 2019, the Pilot was introduced to bring about a much-needed change in attitude towards disclosure and it was meant to represent a step change in the way litigators should approach disclosure. The focus is on issue-based disclosure in terms of which disclosable documents are identified from a narrow list of the key issues in a case. The Pilot also encourages sensible cooperation between parties involved in litigation and the use of advanced technology. The intention behind the Pilot was to enable lawyers to gain greater control of the costs incurred by their clients and eliminate the disclosure of large volumes of wholly irrelevant documents.

The impetus for the Pilot came from the association of general counsel for FTSE 100 companies, the GC100, who were concerned about the disclosure process under the existing regime governed by Part 31 of the Civil Procedure Rules. Their complaint centered on the large sums of money required to produce vast amounts of documents which, in many cases, were of only peripheral relevance to the dispute. In response, the Disclosure Working Group was established, chaired then by Dame Elizabeth Gloster.

After a consultation process, the Disclosure Working Group concluded that the then current disclosure process was not fit for purpose in the 21st century. Neither the judiciary nor the profession had adequately engaged or utilised the wider range or alternative disclosure orders under CPR Part 31, preferring instead to default to ‘standard disclosure’. The searches carried out for disclosure were often far wider than necessary and did not focus on the key issues. In addition, there was inadequate engagement between opposing parties.

The Disclosure Working Group found that the existing disclosure rules were conceptually grounded in the paper disclosure process, and lawyers had not properly engaged with electronic disclosure and the appropriate technology to produce the right proportionate results. They concluded that a new approach to disclosure needed to be piloted, to strike at the root and branch of the disclosure process. After extensive consultation, the Pilot was proposed and tested by smaller firms working in commercial and property litigation. The Pilot was approved by the Civil Procedure Rules Committee in July 2018 and came into force on 1 January 2019, governed by Practice Direction 51U.

How has the Pilot attempted to address the perceived challenges in the disclosure process?

The Pilot has attempted to make narrower forms of disclosure the norm by moving away from a system in which standard disclosure was the default. Instead, it has introduced a two-step approach to disclosure starting with a mini disclosure exercise at the start of proceedings. Each party must now provide an Initial Disclosure List of Documents at the same time as its statement of case (PD 51U, s 5.1). This list comprises the key documents on which it has relied (expressly or otherwise) in support of its pleading. The parties can agree to dispense with initial disclosure, and it is restricted to either 1,000 pages or 200 documents (or such higher but reasonable figure as the parties may agree) (PD 51U, s 5.3).

Any form of further disclosure, referred to as ‘Extended Disclosure’ under the Pilot, needs agreement from a judge, must relate to specific issues, and be proportionate in cost terms (PD 51U, s 6.4). This is an important point as there is no longer an automatic right to disclosure. Several disclosure models are proposed (PD 51U, s 8):

  • only known adverse documents (Model A);
  • only key documents (Model B);
  • request led search-based disclosure limited to key issues (Model C);
  • narrow search-based disclosure including adverse documents (Model D);
  • wide searched-based disclosure (Model E).

Tailored disclosure by reference to a menu of options is not new and was at the heart of the Jackson reforms embodied in CPR Part 31 of the Civil Procedure Rules. Early skeptics of the Pilot questioned whether it would, ultimately, have any greater success in advancing a narrower approach to disclosure.

The Pilot in practice

For the first several months of the Pilot there was a degree of confusion as to its application to proceedings that were previously subject to the Part 31 regime. Reported cases demonstrated that the judiciary were pragmatically trying to balance the two regimes when dealing with applications for specific disclosure arising from Part 31. However, this unintended consequence was addressed by the Chancellor of the High Court, Sir Geoffrey Vos, in his judgment in the case of UTB LLC v Sheffield United Limited and others [2019] EWHC 914 (Ch), [2019] All ER (D) 39 (Sep). The Chancellor confirmed that the provisions of the Pilot apply to cases where an order for disclosure was made under Part 31. Therefore, any subsequent application should be decided through the lens of the Pilot.

Initial disclosure has been regarded by some as a useful addition to the disclosure process. However, as indicated in the Interim Report, some have questioned whether it is required at all given the requirement to disclose documents under the Practice Direction on Pre-action Conduct and Protocols. Others have argued that the lack of a definition as to what constitutes a key document is making the process problematic.

The Pilot replaced the Disclosure Report and optional Electronic Documents Questionnaire previously in use, with the far more prescriptive Disclosure Review Document (DRD). In essence, the DRD provides the parties with a framework within which to work and collaborate about disclosure. Despite the prescriptive nature of the DRD, this has not limited the exchange of correspondence between the parties on the disclosure process. In particular, the list of issues has become a hotspot of contention. The efficacy of the DRD was highlighted in the Interim Report in which it was noted that 88% of respondents felt that the DRD had increased costs.

There have also been reports of gameplaying, with parties taking tactical positions on the completion of the DRD. This was highlighted by the comments of Sir Geoffrey Vos, in the decision in McParland & Partners Ltd v Whitehead [2020] EWHC 298 (Ch), [2020] All ER (D) 106 (Feb). However, the Chancellor made it clear that no advantage should be gained from a party being difficult about agreeing the list of issues or the DRD. Furthermore, judges are to be on the lookout for parties that fail to properly co-operate, as required. The satellite litigation which results from parties being unreasonably difficult only serves to increase the overall cost of the proceedings—something the Pilot intends to reduce.

There are reports of parties agreeing to lists of issues. In one example, parties agreed to 20 issues and that for a number of those issues they would use Model C disclosure—a narrow focused request—and for the rest they would use Model B, reliance-based disclosure with no search obligations. This represents a significant move away from the position of searching for documents with reference to the entire statement of case. In cases where subjective issues like dishonesty are relevant then perhaps more detail is needed to show state of mind and the disclosure net needs to be cast more widely. In other cases, where the issue is a potential breach of contract, disclosure can be more narrowly framed.

In general, it appears parties are more often than not agreeing to the use of Extended Disclosure. However, they do seem to be struggling to agree on which models should be used thereafter (78% of respondents said that they disagreed on the models in the Interim Report). Some early statistics contained in the Commercial Court Report 2018–2019 provided an indication as to the type of orders that were being made in relation to disclosure models in the first six months of the Pilot, which generally appeared to be for narrower disclosure. In cases where an order for a single model of disclosure was made, 53% had opted for Model C (request led search-based disclosure limited to key issues). Where disclosure orders for multiple models were made, 42% were for Model C (request led search-based disclosure limited to key issues) and the rest either Model B (only key documents) or Model D (narrow search-based disclosure including adverse documents). In the Commercial Court, 80% of parties opted for Model C.

However clearly, as the Interim Report indicates, some confusion has emerged around the use of the models for extended disclosure and there is some concern that they are not being used as intended. The approach to choosing between models was demonstrated in the McParland decision, where Models B, C, and D were ordered in respect of different issues for disclosure. Model C was suited to an issue where a vast number of documents were likely to exist but most of which would likely be irrelevant to the actual dispute; whereas Model D was more suited to the central issues of breach and loss, in regard to which there was significant mistrust between the parties.

The use of Disclosure Guidance Hearings (DGH), which were introduced under the Pilot to enable parties to seek guidance from the court concerning the scope or implementation of an order for extended disclosure, was initially limited. Early on in the Pilot’s implementation there was a concerted push by the courts to encourage parties to use the new style of hearing (see, Vannin Capital PCC v RBOS Shareholders Action Group and others [2019] EWHC 1617). However, as the Interim Report notes, critics of DGH have complained about the limited time allocated to these hearings. That appears to be something that has been recognised and going forward parties will be able to seek further time to effectively address disclosure issues and to seek guidance from the court.

What should lawyers be doing?

The Pilot is underpinned by the need for cooperation between the parties which for some practitioners is the silver bullet to solving the problems of volume and cost associated with disclosure. According to proponents of this view, had this co-operation been seen in the Jackson reforms we would not have had the problems experienced with disclosure, and there would have been no need to instigate the Pilot.

It appears that a similar resistance to cooperation was evident in at least the first year of the Pilot. As noted in the Interim Report, when asked whether the new process of disclosure under the Pilot had achieved a ‘culture change’, or a greater degree of co-operation, proportionality and reasonableness in the parties’ approach towards disclosure, 78% of respondents said no.

For there to be a culture change, lawyers and litigants must engage in discussion with their opponents, in relation to disclosure and data management at least, not as enemies, but as parties with a shared problem. In addition to co-operating, it is necessary to utilise the available eDiscovery technology. The problem here is voluminous data, which is caused by technology. Properly deployed technology, however, can mitigate it. Lawyers need to engage with technology experts from the beginning and to enlist their help in identifying with as much as precision as possible what data is relevant, and how it can be interrogated and analysed. The early formation of project teams is advisable.

Technology to tackle the problem

Artificial Intelligence (AI) is being used extensively in cases involving large volumes of data. Early case assessment technologies underpinned by data analytics can explore the key issues in data populations without human intervention or the use of keywords. Lawyers are, for example, able to see millions of documents on a screen and the software automatically categorises the documents into topic groups which can be explored to find key case issues. Alternatively, the technology can be used to build case models that aggregate the data needed for a case.

Machine learning technologies are also being used routinely by lawyers in the UK to streamline the review of documents in cases, whether for case building purposes or disclosure. Typically, lawyers will read a very small percentage of the document population online and a software algorithm will be deployed to learn from them, and then review and categorise the rest of the document population automatically. This type of machine learning or predictive coding technology was approved by the courts in England and Wales even prior to the implementation of the Pilot in Pyrrho Investments v MWB Property [2016] EWHC 256 (Ch).

Today, technology is used in many cases in the UK, mainly to prioritise documents to analyse, rather than to make decisions about whether to disclose or discover documents or not. Much of the less complicated and consuming work lawyers do, such as reviewing vast volumes of documents for discovery, can and is being automated to reduce the cost. Lawyers can then focus their attention on the more complex and strategically challenging aspects of dispute resolution. This allocation of time is certainly what the courts have in mind under the Pilot in the UK, given the aim of reducing the cost of disclosure and litigation. Predictive coding is increasingly being used in situations that in the past would have been viewed as too complex, such as document reviews that involve an analysis of multiple issues simultaneously. As the technology becomes more powerful, lawyers are becoming more adept at using it.

The eDisclosure projects which stand out as being particularly well managed are those which are carried out with careful planning. Early data assessment is conducted right at the outset of the exercise. This allows for informed discussions between parties and obtaining buy-in to disclosure. It also helps with obtaining the right directions from the court. To that end, eDisclosure experts should not be viewed as a mechanical solution to a mechanical problem but rather lawyers should be asking eDisclosure experts to attend Case Management Conferences or Disclosure Guidance Hearings to explain to the court the technical processes of advanced discovery. Working with clients to ensure an early identification of what data exists and exporting it to an environment where it can be reviewed should not be seen as an unnecessary frontloading of costs, but more as a facet of efficient case management that can save much time and cost further down the line.

Where to now?

The Pilot is intended to be a ‘living Pilot,’ and the Disclosure Working Group has put forward a number of revisions to Practice Direction 51U and the DRD in an effort to address some of the early criticisms leveled at the Pilot. The revisions are yet to be approved by the Civil Procedure Rules Committee but, in broad terms, the proposed amendments aim to both clarify and simplify some of the issues concerning the list of issues for disclosure, the models for disclosure, and the DRD.

The effect of the Pilot on the overall costs of a case is still unknown. As things stand, 85% of respondents surveyed at the end of 2019 complained that the Pilot has resulted in additional costs being incurred. However, it is not until cases started under the Pilot conclude, that the true cost impact of the new disclosure regime can be measured. Undoubtedly, by the end of 2021 we will have a clearer view on the success of the Pilot and whether the rule change has helped or whether something more or different is required. The extension of the Pilot does not imply that the Pilot will result in a permanent change to the rules; a reversion to Part 31B of the Civil Procedure Rules has a somewhat surprising level of support. Whichever direction practice takes, the need for collaboration between those who conduct litigation and the best use of technology is fundamental to controlling the costs of disclosure.

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